The Securities and Exchange Commission (SEC) Obtains Preliminary Injunction and Asset Freeze Against Florida Resident Involved in Ponzi Scheme Targeting Religious Community

Today, the Securities and Exchange Commission secured a preliminary injunction against Mina Tadrus and Tadrus Capital LLC in connection with an alleged Ponzi scheme. This injunction includes provisions prohibiting the defendants from violating the charged antifraud provisions of federal securities laws and imposing an asset freeze until a final resolution of the matter.

The SEC’s complaint alleges that since at least September 2020, Tadrus and Tadrus Capital have been actively soliciting and selling investments in Tadrus Capital Fund LP. This purported pooled investment vehicle specifically targeted members of the Egyptian Coptic Christian community. According to the complaint, the defendants managed to raise over $5 million from at least 31 investors by falsely assuring them that their funds would be pooled and invested using algorithmic trading, guaranteeing a steady monthly return on investment (ROI). However, the complaint contends that the defendants did not fulfill their promise of investing the investors’ funds. Instead, they allegedly used at least $1.4 million to make ROI payments to other investors in a classic Ponzi scheme fashion and misappropriated an additional $380,000.

The complaint was filed on July 28, 2023, in the U.S. District Court for the Eastern District of New York. It charges Mina Tadrus and Tadrus Capital LLC with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5, as well as Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940, and Rule 206(4)-8. The SEC seeks permanent injunctive relief, disgorgement, and civil penalties against both defendants, in addition to a conduct-based injunction and an officer-and-director bar against Mina Tadrus.

The SEC’s investigation was conducted by John Lehmann, Doreen Rodriguez, Abigail Rosen, and Lindsay S. Moilanen, under the supervision of Tejal D. Shah. The litigation is being managed by Ms. Rosen and Mr. Lehmann. The SEC acknowledges the assistance of the U.S. Attorney’s Office for the Eastern District of New York, the FBI, and the IRS.

The advisory firms implicated in this matter are as follows:

1. Lloyd George Management (HK) Limited
2. Bluestone Capital Management LLC
3. The Eideard Group, LLC
4. Disruptive Technology Advisers LLC
5. Apex Financial Advisors Inc.

As per the SEC’s findings, these five firms failed to fulfill one or more of the following obligations: conducting necessary audits, delivering audited financials to investors within the stipulated timeframes, and ensuring that client assets were maintained by a qualified custodian. Furthermore, two of the firms neglected to promptly file revised Forms ADV to reflect the receipt of audited financial statements, while one firm inaccurately described the status of its financial statement audits over multiple years when submitting its Form ADV.

Andrew Dean, Co-Chief of the SEC Enforcement Division’s Asset Management Unit, emphasized the significance of the Custody Rule and associated Form ADV reporting requirements in safeguarding investor interests. He stated, “We will continue to ensure that private fund advisers meet their obligations to secure client assets.”

Without admitting or denying the findings, the implicated firms have agreed to the following actions:

• Accept censure for their actions.
• Cease and desist from violating the specific provisions that they were charged with.
• Pay civil penalties, with amounts ranging from $50,000 to $225,000.

This marks the second series of cases initiated by the Commission as part of a targeted investigation into violations of the Investment Advisers Act’s Custody Rule and Form ADV requirements by private fund advisers. The SEC had previously charged nine advisory firms in September 2022 as part of this initiative.